Dems may punt on Bush tax cuts

Senate Minority Leader Mitch McConnell (R-Ky.) predicted that there would be a “raging debate” in Congress this month about whether to extend the Bush-era tax cuts for upper-income earners.

The debate may be more political posturing than anything else.

Story Continued Below

Democrats are increasingly likely to punt the huge tax vote until a lame-duck session after the November elections. President Barack Obama is sending mixed messages about his demands, calling for a rollback of the top income tax cuts while stopping short of threatening to veto a compromise bill that would temporarily extend all tax cuts.

Top Republicans appear to be giving Democrats a way out, suggesting they’d support a temporary extension for high-income earners — a compromise that Obama’s former budget director, Peter Orzsag, floated this week.

Moderate Democrats, meanwhile, are digging in, suggesting they won’t back a bill that fails to extend the tax cuts for families making more than $250,000 and individuals making more than $200,000. Without support from the middle, Democratic leaders probably can’t drum up the votes in the Senate to pass a bill that increases taxes on upper income Americans.

Several moderates — like Sens. Kent Conrad (D-N.D.), Evan Bayh (D-Ind.), Joe Lieberman (I-Conn.) and Ben Nelson (D-Neb.) — have expressed skepticism about raising taxes on any income group as the economic problems in the country grow.

In an interview, Bayh said pushing forward with tax increases — and not seriously slashing spending — will hurt his party politically, particularly with independents.

“First we need to focus on spending restraint instead of just coming out and saying our answer to the deficit is raising taxes,” Bayh told POLITICO. “Otherwise, it lays into the old stereotype that those Democrats, they just can’t wait to raise taxes. … I suspect the rest of the 98 percent [of taxpayers] will think they’re next.”

In an interview, McConnell signaled that he’s more than happy to have an argument about taxing and spending in the runup to the midterm elections.

“Frankly, throw me into that briar patch; that’s a debate we’d love to have,” he said.

While Democrats believe they can paint a fiscally irresponsible GOP as holding middle-class tax cuts hostage to help the wealthy, some worry that the nuance could get lost in the heated rhetoric over raising taxes in the middle of a slumping economy. And some say Obama’s equivocation about whether he’d veto a bill that temporarily extends the tax cuts has only muddied the debate.